Rethinking Adjustable-Rate Mortgages

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September 11, 2012, 6:45 AM PST

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Rethinking Adjustable-Rate Mortgages By:Kirk Haverkamp
     You don't hear a lot about adjustable-rate mortgages (ARMs) these days. That's too bad, because they're still a good choice for many homebuyers, believe it or not.
    ARMs can be a very smart choice for homebuyers who are not planning to stay in the home more than a few years. Think about it - if you're planning to sell the home within seven years, as many homeowners do, what difference does it make if you have a seven-year ARM? Why not take advantage of the lower rate and pocket the difference? >>


Mortgage debt relief may bring new pain: a tax bill
By Jim Puzzanghera
WASHINGTON -- Struggling homeowners who obtain reductions in their mortgage debt face a new obstacle starting next year -- a bill for taxes on that aid.
A special exemption of as much as $2 million per household in principal reduction and other aid from banks, in place since 2007, is set to expire at year's end.>>Mercury


Mortgage Application Volume Down for 5th Straight Week by Jann Swanson
Mortgage applications declined again during the week ended August 31, down 2.5 percent on a seasonally adjusted basis from a week earlier.  The Mortgage Bankers Association reported that its Market Composite Index, a measure of application volume, was down 3 percent on an unadjusted basis from the week ended August 24.>>Mortgage News Daily


The Day Ahead: After Weeks of Waiting, Things Get Serious

by Matthew Graham
In case you missed it, the ECB has been doing everything it can to telegraph today's policy changes.  This began as early as late July's "London speech" from ECB President Mario Draghi in which he promised to do whatever was necessary "to preserve the euro," further adding, "and believe me, it will be enough!"  >>Mortgage News Daily


Mortgage Rates Move Lower, Closer To Historic Lows
 Fixed mortgage rates were down this week for both the 30 year and 15 year home loan products, reports mortgage rate research website, Rate and fee combinations posted in the rate tables on the website reflected the decrease in the cost of home financing>> Yahoo News


Distressed Sales Continued to Decline in Market Share
 by Jed Smith, According to the July REALTORS® Confidence Index report (RCI), twenty-four percent of respondents reported selling distressed property (foreclosed and short sales), lower than last year's figure of 31 percent. Cash sales accounted for 39 percent of distressed sales. Respondents reported multi-bidding on foreclosed and short sale properties and also experiencing a frustrating lending and appraisal process



Five Questions: Will I Owe Taxes on Forgiven Mortgage Debt?.
 By Nick Timiraos
    A key tax provision set to expire at the end of the year could trip up the Obama administration's push to have banks forgive mortgage debt more often for borrowers who are underwater.
    ive years ago, Congress passed a law, the Mortgage Forgiveness Debt Relief Act, that would prevent households from having to treating certain types of forgiven mortgage debt as taxable income.
    If the provision expires as scheduled on Dec. 31, it could throw a wrench not only into efforts to trim loan balances for underwater borrowers, but also for short sales. >> Wall Street Journal


Why you shouldn't pay down your mortgage faster
 The impulse to pay off your mortgage more quickly than you need to is understandable, especially these days.
    Interest rates are near historic lows, so it's possible to replace a 30-year mortgage with a 15-year loan and still afford the monthly payments. Or, if you've already refinanced at a dirt cheap rate, you can take those savings and pay down your principal faster.
    But the allure is more emotional than financial. Mortgage debt provides great financial flexibility, and paying it down fast probably isn't the best way to grow your nest egg. >>CBS News


US taxpayers bail out California homeowners, as banks fail to pay their share
 By William La Jeunesse
   Contrary to what voters were led to believe, California took the unprecedented step this month to give banks and struggling homeowners up to $100,000 in taxpayer funds to reduce underwater mortgages.
   Originally, banks and lenders were supposed to pay 50 percent of the cost of reducing the principal for those whose homes are worth less than their mortgage. But when the banks refused, California took the controversial step of paying the entire amount, up to $100,000.>>Fox News


Mortgage Rates Unchanged To Slightly Higher To Begin The Week
 Mortgage rates moved gently higher today in most cases, though some lenders were unchanged and in rare cases, slightly improved.  There was little by way of relevant data or events to motivate market movement as the August "vacation weeks" gets underway.  The little movement that was seen was not enough to make any sort of dent in the 3.5% Best-Execution rate that recently returned for 30yr Fixed Conventional loans>> Mortgage News Daily


Former Citigroup Chief Weill Surprises with Call for Break-Up of Big Banks
By Jed Horowitz and David Henry .Sanford "Sandy" Weill, the tycoon who built financial conglomerate Citigroup Inc. into a massive U.S. commercial and investment bank, said it is time to split up the biggest banks so they can go back to growing again.
The comments were an astonishing about-face for Weill, who in the late 1990s smashed the U.S. law known as "Glass-Steagall" that divided commercial and investment banking. Riskier investment banking should be separated from safer commercial banking and the government should only have to insure the latter, Weill said. Insurance Journal


New Home Sales 25% Higher than July 2011, Inventory Continues to Shrink
 New home sales rose in July to a seasonally adjusted annual rate of 372,000 units.  According to a joint release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, this was an increase of 3.2 percent from sales in June.  The June rate was adjusted upward from the 350,000 originally reported to 359,000 units.   July sales were 25.3 percent higher than in July 2011 when the rate of sales was estimated at 297,000 units. >>Mortgage News Daily


GSEs to Allow Short Sales for Borrowers Who Are Current on Mortgage
The streamlined program rules will enable lenders and servicers to quickly and easily qualify borrowers, who do not have to be delinquent on their mortgages, to qualify for short sales.  As a further step to facilitate speedy sales, both of the GSEs have authorized a payment of up to $6,000 to incentivize second lien holders to allow the short sales to proceed. >> Mortgage News Daily


Did you miss out on lowest mortgage rates? By Amy Hoak
 (MarketWatch)-Mortgage rates have edged up for the past few weeks, but rate watchers aren't so sure the trend is here to stay.
"The U.S. economy is not out of the woods, the European debt crisis has not been solved, we've got this looming fiscal cliff ... there is no shortage of headwinds to the economy and there's the possibility of more Fed stimulus," said Greg McBride, senior financial analyst for, an aggregator of financial rate information. "All it would take is one hiccup and we could see rates moving back down." >>Read More MarketWatch


No-fee mortgage option is on the way By Jennifer Liberto
 Richard Cordray, who runs the consumer bureau, announced new rules Friday that would limit fees on mortgages.  Lenders would have to offer potential home buyers an option to get mortgages with no fees, under a rule proposed by the Consumer Financial Protection Bureau.  Generally, homeowners pay fees and points in exchange for lower overall interest rates on mortgage loans. >> Read More CNN Money


California median home price highest in nearly 4 years By Alejandro Lazo
 Median price hits $281,000 in July as more expensive homes were sold and fewer foreclosures were purchased in the key Southern California and San Francisco Bay Area markets.The median home price in California rose to a nearly four-year high in July as more expensive homes sold and fewer foreclosures were purchased in the key Southern California and San Francisco Bay Area markets.  Read More Los Angeles Times


Mortgage Reach Two Month Highs.

Mortgage Rates made an abrupt move higher today, leaving most lenders at their worst levels since early June.  Recent momentum has carried rates in a weaker direction despite a relative lack of impetus from underlying market events.  At first, this could be chalked up to low volume volatility, but volume surged today (yesterday too, to a smaller extent), and securities in rates markets hit levels not seen in months.  All told, it was enough to move the Best-Execution rate decisively up to 3.625%.  Read More Mortgage News Daily 


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Tanya Van Blake-Coleman
Van Blake-Coleman Realty, St. Thomas/ - St Thomas, VI
Improving the Quality of Your Life

Lots of good information. I have not considered an ARM in years. Perhaps it is time to reconsider.

Sep 10, 2012 11:49 PM #1
Bill Ladewig - Escondido, CA
Experience Is Your Advantage

Hi Tanya, as long as credit worthy borrowers are provided honestly explained choices ARMs can be an excellent choice.  I exclude option arms which were rarely a good choice.  That said, I'll bet that sometime in the future they will be back with new lipstick because they can be very profitable for lenders.

Sep 11, 2012 05:43 AM #2
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Bill Ladewig

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